Do you get the feeling that Midway's ongoing bankruptcy drama isn't going to end well?

Reports yesterday indicated that executives planned to either structure a reorganization or sell off the company's only major IP asset - Mortal Kombat. Guess which one of those will be easier to do.

But a filing by Midway's new owner seems just as alarming.

GamePolitics readers may recall our February 15th exclusive report on allegations of sleazy insider dealing in the Midway affair. At the time, some Midway creditors wondered who new owner Mark Thomas was and how he was able to purchase Midway from media mogul Sumner Redstone for a mere $100,000 in November.

Thomas, through his shell corporation, Acquisitions Holding Subsidiary, fired back in U.S. Bankruptcy Court on Friday. Midway, says AHS, is hemorrhaging cash and Thomas wants his investment collateral protected:

[Midway has] an immediate need to access and use AHS's Cash Collateral. Nor can it be disputed that, based upon the Debtors' 13 week forecasted Budget, [Midway is] hemorrhaging cash at an alarming rate. Indeed, the [Midway] Budget indicates that between February 9, 2009 and May 4, 2009, [Midway] will burn through approximately $12,392,598 in cash representing an approximately 75% depletion of its cash reserves...

The Objecting Noteholders have made several unsubstantiated and unsupportable accusations - none of which are true - regarding the relationship and transactions between Sumner Redstone and AHS' s principal Mark Thomas... each of those allegations is without merit...

Unfortunately, their low cash position, high debt load, and unforgiving creditors place them in the position of having to generate cash at a bad time, and it's always easiest to sell the assets with the most value.

I think it's premature to say that they are dead, but fair to say that a [potential] sale of Mortal Kombat will weaken them.

Having seen Thomas's response to the objection of the debtors, I think the picture is becoming more clear. To me, it seems that Redstone obviously had knowledge of Midway's "hemorrhaging" of cash, and realized that he had to sell off the company for pennies on the dollar. While it seems ludicrous to sell it for $100,000, it's also hard to properly appraise Midway's worth, as it was up to its neck in debt and was losing cash quickly.

Thomas essentially acquired, for the price of a hundred thousand dollars, a company on the verge of collapse. While he stands to gain in the long term (thirty million dollars is a ton of money, after all), it's undeniable that that payoff is still far in the future.

I don't see any way for Midway to get out of the red unless they drastically restructure and change their business strategy (e.g. Capcom or Atari). The Chapter 11 filing gives Thomas the flexibility to make adjustments inside Midway to turn it back into a viable company, while also guaranteeing a return on his initial investment should everything turn out alright.

Maybe it's dirty and reeks of insider dealing, but the thought of a class war is childish. The government and the Constitution doesn't guarantee a golden parachute for every citizen--just the opportunity to try to secure one.

This whole situation with Midway just reeks. From what I've been reading, I think investors are right to wonder who this Mark Thomas guy is and the nature of this deal. Combine that with Midway having been run so badly for so many years before this bankruptcy and I wonder if they can really be saved.

It is hard to take Thomas seriously when yesterday, it was reported that Midway set aside something like $3.75M in bonuses for executives as incentive to get Mortal Kombat sold while at the same time, they have been telling employees the company can't afford to pay out their accumulated unused time off. The company's in bankruptcy largely due to these executives, there should be no bonuses paid to them whatsoever. Selling MK or restructuring is their base job, it isn't something extra that should be bonuses. But in the US executive culture right now, bonuses seem to be an expection anyway.

>> But in the US executive culture right now, bonuses seem to be an expection anyway.

Yup, it's capitalism at its finest. "I'm gonna get mine and I don't care who gets screwed in the process." I keep waiting for the rest of the country to wake up and realize they're never going to be part of the 'financial elite' and start a class war. These guys keep walking away from ruined companies with millions of dollars while the rank-and-file are heading for the food banks and wondering if they are going to be able to keep their houses. It just makes me sick.

Shout box

Infophile: @Matt: Apparently Dan Aykroyd actually is involved. We don't know how yet, though, but he's apparently going to be in the movie in some way.08/02/2015 - 4:17am

Mattsworkname: I still hold that not having the origonal cast invovled in any way hurts this movie, and unless the 4 actresses in the lead roles can some how measure up to the comic timing of the origonal cast, i just don't see it being a success08/02/2015 - 12:46am

Mattsworkname: Mecha: regardless of what you think of it, GB 2 was a finanical success and for it time did well with audiances ,even if it wasnt as popular as the first08/02/2015 - 12:45am

MechaTama31: I think they're better off trying to do something different, than trying to be exactly the same and having every little difference held up as a shortcoming. Uncanny valley.08/01/2015 - 11:57pm

MechaTama31: Having the original cast didn't do much for... that pink-slimed atrocity which we must never speak of.08/01/2015 - 11:56pm

Mattsworkname: Andrew: If the new ghostbusters bombs, I cant help but feel it'll be cause it removed the origonal cast and changed the formula to much08/01/2015 - 8:31pm

Andrew Eisen: Not the best look but that appears to be a PKE meter hanging from McCarthy's belt.08/01/2015 - 7:34pm

Mattsworkname: You know what game is a lot of fun? rocket league. It' s a soccer game thats actually fun to play cause your A Freaking CAR!08/01/2015 - 7:02pm

Mattsworkname: Nomad colossus did a little video about it, showing the world and what can be explored in it's current form. It's worth a look, and he uses text for commentary as not to break the immerison08/01/2015 - 5:49pm

Mattsworkname: I feel some more mobility would have made it more interesting and I feel that a larger more diverse landscape with better graphiscs would help, but as a concept, it interests me08/01/2015 - 5:48pm

Andrew Eisen: Huh. I guess I'll have to check out a Let's Play to get a sense of the game.08/01/2015 - 5:47pm

Mattsworkname: It did, I found the idea of exploring a world at it's end, exploring the abandoned city of a disappeared alien race and the planets various knooks and crannies intriqued me.08/01/2015 - 5:46pm

Andrew Eisen: Did it appeal to you? If so, what did you find appealing?08/01/2015 - 5:43pm

Mattsworkname: Its an interesting concept, but it's not gonna appeal to everyone thats for sure,08/01/2015 - 5:40pm

Andrew Eisen: That sounds horrifically boring. Doesn't sound like an interesting use of its time dilation premise either. 08/01/2015 - 5:36pm

Mattsworkname: an observer , seeing this sorta frozen world and being able to explore without any restriction other then time. no enimes, no threats, just the chance to explore08/01/2015 - 5:34pm

Mattsworkname: Andrew: I meant lifeless planet, Time frame is an exploration game. Your dropped onto a world which is gonna be hit by a metor in 10 seconds, but due to time dilation ,you actually have ten minutes, so you can explore the world, in it's last moments, as08/01/2015 - 5:32pm